The figure was pushed up by investors worried the country would be overwhelmed by the cost of rescuing banks and regional governments which are now also asking for money.

It spooked the markets leaving London’s FTSE 100 down 2.1 per cent and a three per cent loss was recorded on the French and German stock exchanges.

Madrid has so far resisted asking for a sovereign loan but in May it was granted a £78billion package of EU funding to prop up its ailing banks.

‘Credibility in Spain’s finances and politicians continues to be eroded as bond yields continue to rise across the curve raising fears that a sovereign bailout will shortly follow,’ said Michael Hewson, senior analyst at CMC Markets.

But Spain’s economy minister Luis de Guindos, who has overseen a wave of austerity cuts, denied the country needed more help.

He said ministers had made a number of ‘important economic reforms to establish the base of a return to a healthy growth for Spain’s economy’.

On Sunday, Murcia followed Valencia in appealing to central government for a share of a £14billion pot of emergency cash set aside earlier this month.

Many regions are so heavily in debt due to the recession and the burst real estate bubble that they cannot raise money on their own.

While the yield for ten-year Spanish bonds hit 7.51 per cent, in comparison the yield on Germany’s equivalent bond is just 1.16 per cent.